Cambridge Bancorp Announces Record Quarterly Earnings and Declares Dividend

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Oct 15, 2018, 17:20 ET

CAMBRIDGE, Mass., Oct. 15, 2018 /PRNewswire/ -- Cambridge Bancorp (NASDAQ: CATC) (the "Company"), the parent of Cambridge Trust Company, today announced unaudited net income of $6,659,000 for the quarter ended September 30, 2018, representing an increase of $1,649,000, or 32.9%, compared to net income of $5,010,000 for the quarter ended September 30, 2017. Income before income taxes was $8,764,000 for the quarter ended September 30, 2018, representing an increase of $1,060,000, or 13.8%, compared to $7,704,000 for the same quarter of last year. Diluted earnings per share were $1.61 for the third quarter of 2018, representing a 32.0% increase over diluted earnings per share of $1.22 for the same quarter of 2017.

For the nine months ended September 30, 2018, unaudited net income was $18,575,000, representing an increase of $4,723,000, or 34.1%, compared to net income of $13,852,000 for the nine months ended September 30, 2017. Income before income taxes was $24,197,000 for the nine months ended September 30, 2018, representing an increase of $3,358,000, or 16.1%, compared to $20,839,000 for the same period of last year. Diluted earnings per share were $4.49 for the first nine months of 2018, representing a 33.2% increase over diluted earnings per share of $3.37 for the same nine months of 2017.

Third quarter 2018 highlights as compared to the third quarter of 2017:

Wealth Management Assets under Management and Administration total $3.2 billion, an increase of 8.1%
Revenue of $25.1 million, an increase of 11.0%
Loan growth of $95.9 million, or 7.1%

"We are pleased to report that the Company continues to experience strong performance," noted Denis K. Sheahan, Chairman and CEO. "Cambridge Bancorp posted robust profitability metrics for the quarter with annualized return on average assets of 1.33% and annualized return on average shareholders' equity of 16.71%. Our earnings performance was driven by a sustained trend in loan growth, which has increased $95.9 million from the same quarter end of 2017. We have additionally focused on growth in noninterest income businesses, leading to an increase in income before income taxes of 16.1% for the nine months ended September 30, 2018 as compared to the same period a year ago."

Balance Sheet

Total assets increased $39.0 million, or 2.0%, from December 31, 2017 and were $2.0 billion as of September 30, 2018.

Total loans increased $100.9 million, or 7.5%, from December 31, 2017 and stood at $1.5 billion as of September 30, 2018. The growth in total loans was due to net loan growth in the commercial real estate, residential real estate, and commercial & industrial portfolios. Commercial real estate loans increased $54.9 million, from $633.6 million at December 31, 2017 to $688.5 million at September 30, 2018. Residential real estate loans increased $34.6 million, from $538.9 million at December 31, 2017 to $573.5 million at September 30, 2018. Commercial & industrial loans increased $16.9 million, from $65.3 million at December 31, 2017 to $82.2 million at September 30, 2018.

The Company's total investment securities portfolio increased by $14.2 million, or 3.2%, from $437.2 million at December 31, 2017 to $451.4 million at September 30, 2018.

Core deposits, which the Company defines as all deposits other than certificates of deposit, increased by $2.1 million from December 31, 2017. The cost of total deposits for the quarter ended September 30, 2018 was 0.29%, as compared to 0.19% for the quarter ended September 30, 2017. The cost of total deposits for the nine months ended September 30, 2018 was 0.25%, as compared to 0.18% for the nine months ended September 30, 2017. Total deposits at September 30, 2018 were $1.7 billion.

Short term borrowings increased from $0 at December 31, 2017 to $66.7 million at September 30, 2018 as the Company funded strong loan growth during the year.

Net Interest and Dividend Income

For the quarter ended September 30, 2018, net interest and dividend income after provision for loan losses increased by $1.4 million, or 9.7%, to $15.7 million, as compared to $14.3 million for the quarter ended September 30, 2017. Interest on loans increased by $1.7 million, or 13.2%, which was driven by a combination of the impact of rising rates on our loan portfolio and net loan growth. The Company's net interest margin, on a fully taxable equivalent basis, increased 12 basis points to 3.35% for the quarter ended September 30, 2018, as compared to 3.23% for the quarter ended September 30, 2017.

For the nine months ended September 30, 2018, net interest and dividend income after provision for loan losses increased by $3.9 million, or 9.2%, to $46.4 million, as compared to $42.5 million for the nine months ended September 30, 2017. Interest on loans increased by $4.2 million, or 11.1%, which was driven by a combination of the impact of rising rates on our loan portfolio and net loan growth. The Company's net interest margin, on a fully taxable equivalent basis, increased nine basis points to 3.33% for the nine months ended September 30, 2018, as compared to 3.24% for the nine months ended September 30, 2017.

Noninterest Income

Total noninterest income increased by $952,000, or 11.9%, to $8.9 million for the quarter ended September 30, 2018, as compared to $8.0 million for the quarter ended September 30, 2017, primarily as a result of higher Wealth Management revenue and higher loan related derivative income associated with the Company's interest rate risk strategy. Noninterest income was 35.6% of total revenue for the quarter ended September 30, 2018. Wealth Management revenue increased by $648,000, or 10.6%, for the third quarter of 2018, as compared to the third quarter of 2017, primarily due to market appreciation. Wealth Management Assets under Management and Administration increased by $85.8 million from December 31, 2017 to $3.2 billion as of September 30, 2018. Loan related derivative income increased $352,000 for the third quarter of 2018, as compared to the third quarter of 2017, due to the volume of derivative transactions executed in the third quarter of 2018.

Total noninterest income increased by $2.3 million, or 10.2%, to $25.0 million for the nine months ended September 30, 2018, as compared to $22.6 million for the nine months ended September 30, 2017, primarily as a result of higher Wealth Management revenue and higher loan related derivative income. Noninterest income was 34.6% of total revenue for the nine months ended September 30, 2018. Wealth Management revenue increased by $2.0 million, or 11.5%, for the nine months ended September 30, 2018, primarily due to market appreciation. Loan related derivative income increased $573,000 for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, due to the volume of derivative transactions executed in 2018.

Noninterest income increases were partially offset by lower gains on loans held for sale of $242,000 for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017.

Noninterest Expense

Total noninterest expense increased by $1.3 million, or 8.7%, to $15.9 million for the quarter ended September 30, 2018, as compared to $14.6 million for the quarter ended September 30, 2017, primarily driven by increased salaries and employee benefits expense and marketing expense. The increase in salaries and employee benefits expense of $1.3 million was driven by the combination of increased staffing to support business initiatives, higher employee benefit costs including performance based equity compensation, and the current year adoption of accounting guidance ("ASU 2017-07") for net periodic pension costs and net periodic postretirement benefit costs. The 2018 adoption of ASU 2017-07 required that non-service related pension expense and income items no longer be included in salaries and employee benefits in the Company's income statement. The non-service related pension expense and income items are instead included in other expenses. Previously reported salaries and employee benefits and other expenses have been restated to reflect the retrospective adoption. The amount added to salaries and employee benefits and deducted from other expenses from the adoption of ASU 2017-07 during the quarter ended September 30, 2018 was approximately $225,000. The retrospective application for the quarter ended September 30, 2017 was a decrease in salaries and employee benefits and an increase in other expenses of approximately $66,000. The increase of $240,000 in marketing expense was due to the increased focus of growing brand awareness within our markets.

Noninterest expense increases were partially offset by lower other expenses of $243,000 resulting from the adoption of ASU 2017-07 as discussed above and lower professional services of $193,000 for the quarter ended September 30, 2018, as compared to September 30, 2017.

Total noninterest expense increased by $2.9 million, or 6.5%, to $47.1 million for the nine months ended September 30, 2018, as compared to $44.3 million for the nine months ended September 30, 2017, primarily driven by increased salaries and employee benefits expense and marketing expense. The increase in salaries and employee benefits of $3.8 million was driven by the combination of increased staffing to support business initiatives, higher employee benefit costs including performance based equity compensation, and the adoption of ASU 2017-07. The amount added to salaries and employee benefits and deducted from other expenses from the adoption of ASU 2017-07 for the nine months ended September 30, 2018 was approximately $674,000. The retrospective application for the nine months ended September 30, 2017 was a decrease in salaries and employee benefits and an increase in other expenses of approximately $185,000. The increase of $271,000 in marketing expense was due to the increased focus of growing brand awareness within our markets.

Noninterest expense increases were partially offset by lower other expenses of $838,000 resulting from the adoption of ASU 2017-07 as discussed above and lower professional services of $173,000 for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017.

Asset Quality

Loan quality remained sound with non-performing loans totaling $807,000, or 0.06% of total loans outstanding as of September 30, 2018. The allowance for loan losses was $16.1 million, or 1.11% of total loans outstanding at September 30, 2018, compared to $15.3 million, or 1.13% of total loans outstanding at year end 2017.

Income Taxes

In accordance with the Tax Cuts and Jobs Act of 2017, the Company's federal statutory corporate tax rate decreased from 35% to 21% effective January 1, 2018. The effective tax rate was 24.0% for the quarter ended September 30, 2018, as compared to 35.0% for the quarter ended September 30, 2017. For the nine months ended September 30, 2018, the effective tax rate was 23.2%, as compared to 33.5% for the nine months ended September 30, 2017. Additionally, the Company recognized tax benefit from the accounting for share-based payments in the amount of $216,000 for the nine months ended September 30, 2018.

Dividend

On October 15, 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.50 per share, which is payable on November 15, 2018 to shareholders of record as of the close of business on November 1, 2018.

About Cambridge Bancorp

Cambridge Bancorp, the parent company of Cambridge Trust Company, is based in Cambridge, Massachusetts. Cambridge Trust Company is a 128-year-old Massachusetts chartered commercial bank with approximately $2.0 billion in assets and 10 Massachusetts locations in Cambridge, Boston, Belmont, Concord, Lexington, and Weston. Cambridge Trust Company is one of New England's leaders in private banking and wealth management with $3.2 billion in client assets under management and administration. The Wealth Management group maintains offices in Boston and Concord, Manchester and Portsmouth, New Hampshire.

The accompanying unaudited condensed interim and annual consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K, which is posted in the investor relations section of the Company's website at www.cambridgetrust.com.

Forward-looking Statements

Certain statements herein may constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements about the Company and its industry involve substantial risks and uncertainties. Statements other than statements of current or historical fact, including statements regarding the Company's future financial condition, results of operations, business plans, liquidity, cash flows, projected costs, and the impact of any laws or regulations applicable to the Company, are forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Such factors include, but are not limited to, the following: economic conditions being less favorable than expected, disruptions to the credit and financial markets, weakness in the real estate market, legislative, regulatory or accounting changes that adversely affect the Company's business and/or competitive position, the Dodd-Frank Act's consumer protection regulations, disruptions in the Company's ability to access the capital markets and other factors that are described in the Company's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year end December 31, 2017, which the Company filed on March 21, 2018. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. You are cautioned not to place undue reliance on these forward-looking statements.

CONTACT:
Cambridge Bancorp
Michael F. Carotenuto
Chief Financial Officer
617-520-5520

CAMBRIDGE BANCORP AND SUBSIDIARIES UNAUDITED QUARTERLY RESULTS September 30, 2018

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
	(dollars in thousands, except per share data)

Interest and Dividend Income	$	17,602		$	15,673		$	50,670		$	45,447
Interest Expense		1,431			1,034			3,492			2,617
Net Interest and Dividend Income		16,171			14,639			47,178			42,830
Provision for Loan Losses		457			310			787			360
Noninterest Income		8,929			7,977			24,951			22,649
Noninterest Expense		15,879			14,602			47,145			44,280
Income Before Income Taxes		8,764			7,704			24,197			20,839
Income Tax Expense		2,105			2,694			5,622			6,987
Net Income	$	6,659		$	5,010		$	18,575		$	13,852

Data Per Common Share:
Basic Earnings Per Share	$	1.62		$	1.23		$	4.53		$	3.40
Diluted Earnings Per Share		1.61			1.22			4.49			3.37
Dividends Declared Per Share		0.50			0.47			1.46			1.39

Avg. Common Shares Outstanding:
Basic		4,064,620			4,037,026			4,059,608			4,027,378
Diluted		4,101,378			4,070,332			4,095,447			4,062,743

Selected Operating Ratios:
Net Interest Margin, FTE		3.35	%		3.23	%		3.33	%		3.24	%
Cost of Funds		0.29	%		0.22	%		0.24	%		0.19	%
Cost of Interest Bearing Liabilities		0.45	%		0.33	%		0.37	%		0.28	%
Cost of Deposits		0.29	%		0.19	%		0.25	%		0.18	%
Return on Average Assets		1.33	%		1.05	%		1.26	%		0.99	%
Return on Average Equity		16.71	%		13.84	%		16.21	%		13.25	%
Efficiency Ratio		63.26	%		64.56	%		65.36	%		67.62	%

				September 30,			December 31,			September 30,
				2018			2017			2017

Total Assets				$	1,988,944		$	1,949,934		$	1,864,231
Total Loans					1,451,781			1,350,899			1,355,908
Non-Performing Loans					807			1,298			1,702
Allowance for Loan Losses					16,106			15,320			15,620
Allowance to Total Loans					1.11	%		1.13	%		1.15	%
Total Deposits					1,731,279			1,775,400			1,676,918
Total Shareholders' Equity					160,776			147,957			146,051
Total Shareholders' Equity to Total Assets					8.08	%		7.59	%		7.83	%
Wealth Management AUM					3,047,983			2,971,322			2,826,984
Wealth Management AUM & AUA					3,171,465			3,085,669			2,932,726
Book Value Per Share					39.16			36.24			35.78

CAMBRIDGE BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS

	September 30, 2018		December 31, 2017
	(dollars in thousands, except par value)
Assets
Cash and cash equivalents	$	16,431	$	103,591
Investment securities
Available for sale, at fair value (amortized cost $186,715 and $208,911, respectively)		180,363		205,017
Held to maturity, at amortized cost (fair value $266,685 and $233,554, respectively)		271,005		232,188
Total investment securities		451,368		437,205
Loans held for sale, at lower of cost or fair value		—		—
Loans
Residential mortgage		573,525		538,920
Commercial mortgage		688,536		633,649
Home equity		70,173		74,444
Commercial & Industrial		82,243		65,295
Consumer		37,304		38,591
Total loans		1,451,781		1,350,899
Less: allowance for loan losses		(16,106)		(15,320)
Net loans		1,435,675		1,335,579
Federal Home Loan Bank of Boston Stock, at cost		6,666		4,242
Bank owned life insurance		30,800		31,083
Banking premises and equipment, net		8,836		9,310
Deferred income taxes, net		8,990		8,273
Accrued interest receivable		5,536		5,128
Other assets		24,642		15,523
Total assets	$	1,988,944	$	1,949,934
Liabilities
Deposits
Demand	$	505,951	$	493,613
Interest bearing checking		385,617		462,957
Money market		119,241		69,259
Savings		606,843		589,741
Certificates of deposit		113,627		159,830
Total deposits		1,731,279		1,775,400
Short-term borrowings		66,700		—
Long-term borrowings		3,452		3,579
Other liabilities		26,737		22,998
Total liabilities		1,828,168		1,801,977
Shareholders' Equity
Common stock, par value $1.00; Authorized 10,000,000 shares; Outstanding: 4,105,742 shares and 4,082,188 shares, respectively		4,106		4,082
Additional paid-in capital		37,789		35,663
Retained earnings		127,883		114,093
Accumulated other comprehensive loss		(9,002)		(5,881)
Total shareholders' equity		160,776		147,957
Total liabilities and shareholders' equity	$	1,988,944	$	1,949,934

CAMBRIDGE BANCORP AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
	(dollars in thousands, except share data)
Interest and dividend income
Interest on taxable loans	$	14,808	$	13,038	$	42,318	$	37,966
Interest on tax-exempt loans		91		121		279		391
Interest on taxable investment securities		1,936		1,712		5,570		4,762
Interest on tax-exempt investment securities		591		641		1,817		1,966
Dividends on FHLB of Boston stock		93		107		202		192
Interest on overnight investments		83		54		484		170
Total interest and dividend income		17,602		15,673		50,670		45,447
Interest expense
Interest on deposits		1,275		809		3,290		2,183
Interest on borrowed funds		156		225		202		434
Total interest expense		1,431		1,034		3,492		2,617
Net interest and dividend income		16,171		14,639		47,178		42,830
Provision for Loan Losses		457		310		787		360
Net interest and dividend income after provision for loan losses		15,714		14,329		46,391		42,470
Noninterest income
Wealth management revenue		6,779		6,131		19,044		17,077
Deposit account fees		782		768		2,306		2,387
ATM/Debit card income		294		334		875		879
Bank owned life insurance income		129		139		393		448
Gain (loss) on disposition of investment securities		—		—		2		(3)
Gain on loans held for sale		37		39		82		324
Loan related derivative income		636		284		1,220		647
Other income		272		282		1,029		890
Total noninterest income		8,929		7,977		24,951		22,649
Noninterest expense
Salaries and employee benefits		10,326		9,000		30,842		27,026
Occupancy and equipment		2,290		2,358		6,736		6,936
Data processing		1,329		1,111		3,848		3,830
Professional services		761		954		2,477		2,650
Marketing		595		355		1,369		1,098
FDIC Insurance		151		154		437		466
Other expenses		427		670		1,436		2,274
Total noninterest expense		15,879		14,602		47,145		44,280
Income before income taxes		8,764		7,704		24,197		20,839
Income tax expense		2,105		2,694		5,622		6,987
Net income	$	6,659	$	5,010	$	18,575	$	13,852
Share data:
Weighted average number of shares outstanding, basic		4,064,620		4,037,026		4,059,608		4,027,378
Weighted average number of shares outstanding, diluted		4,101,378		4,070,332		4,095,447		4,062,743
Basic earnings per share	$	1.62	$	1.23	$	4.53	$	3.40
Diluted earnings per share	$	1.61	$	1.22	$	4.49	$	3.37

CAMBRIDGE BANCORP AND SUBSIDIARIES MARGIN & YIELD ANALYSIS

	Three Months Ended
	September 30, 2018							September 30, 2017
	Average Balance		Interest Income/ Expenses ⁽¹⁾		Rate Earned/ Paid ⁽¹⁾			Average Balance		Interest Income/ Expenses ⁽¹⁾		Rate Earned/ Paid ⁽¹⁾
	(dollars in thousands)
ASSETS
Interest-earning assets
Loans ⁽²⁾
Taxable	$	1,417,426	$	14,808		4.14	%	$	1,330,390	$	13,038		3.89	%
Tax-exempt		9,855		116		4.67			14,950		186		4.94
Securities available for sale ⁽³⁾
Taxable		193,703		790		1.62			226,164		902		1.58
Securities held to maturity
Taxable		199,841		1,146		2.28			154,129		810		2.08
Tax-exempt		76,030		749		3.91			80,717		986		4.85
Cash and due from banks		27,875		83		1.18			28,863		54		0.74
Total interest-earning assets ⁽⁴⁾		1,924,730		17,692		3.65	%		1,835,213		15,976		3.45	%
Non interest-earning assets		74,738							75,753
Allowance for loan losses		(15,845)							(15,451)
Total assets	$	1,983,623						$	1,895,515
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Checking accounts	$	388,460	$	64		0.07	%	$	381,652	$	46		0.05	%
Savings accounts		618,021		707		0.45			573,332		376		0.26
Money market accounts		107,096		206		0.76			69,437		26		0.15
Certificates of deposit		123,900		298		0.95			164,547		361		0.87
Total interest-bearing deposits		1,237,477		1,275		0.41			1,188,968		809		0.27
Other borrowed funds		26,626		156		2.32			67,126		225		1.33
Total interest-bearing liabilities		1,264,103		1,431		0.45	%		1,256,094		1,034		0.33	%
Non-interest-bearing liabilities
Demand deposits		535,777							470,016
Other liabilities		25,669							25,775
Total liabilities		1,825,549							1,751,885
Shareholders' equity		158,074							143,630
Total liabilities & shareholders' equity	$	1,983,623						$	1,895,515
Net interest income on a fully taxable equivalent basis				16,261							14,942
Less taxable equivalent adjustment				(183)							(410)
Net interest income			$	16,078						$	14,532
Net interest spread ⁽⁵⁾						3.20	%						3.13	%
Net interest margin ⁽⁶⁾						3.35	%						3.23	%


(1)	Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% in 2018 and 35% in 2017.
(2)	Nonaccrual loans are included in average amounts outstanding.
(3)	Average balances of securities available for sale calculated utilizing amortized cost.
(4)	Federal Home Loan Bank stock balance and dividend income is excluded from interest-earning assets.
(5)	Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(6)	Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.

CAMBRIDGE BANCORP AND SUBSIDIARIES MARGIN & YIELD ANALYSIS

	Nine Months Ended
	September 30, 2018			September 30, 2017
	Average Balance	Interest Income/ Expenses ⁽¹⁾	Rate Earned/ Paid ⁽¹⁾	Average Balance	Interest Income/ Expenses⁽¹⁾	Rate Earned/ Paid ⁽¹⁾
	(dollars in thousands)
ASSETS
Interest-earning assets
Loans ⁽²⁾
Taxable	$1,383,503	$42,318	4.09%	$1,312,432	$37,966	3.87%
Tax-exempt	10,279	354	4.60	15,917	601	5.05
Securities available for sale ⁽³⁾
Taxable	200,259	2,449	1.64	261,106	3,158	1.62
Securities held to maturity
Taxable	187,167	3,121	2.23	101,819	1,604	2.11
Tax-exempt	77,458	2,300	3.97	82,023	3,024	4.93
Cash and due from banks	48,817	484	1.33	35,746	170	0.64
Total interest-earning assets ⁽⁴⁾	1,907,483	51,026	3.58%	1,809,043	46,523	3.44%
Non interest-earning assets	71,539			73,733
Allowance for loan losses	(15,701)			(15,352)
Total assets	$1,963,321			$1,867,424
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Checking accounts	$414,691	$166	0.05%	$395,759	$84	0.03%
Savings accounts	620,036	1,907	0.41	557,442	951	0.23
Money market accounts	78,798	261	0.44	71,044	79	0.15
Certificates of deposit	139,683	956	0.92	168,136	1,069	0.85
Total interest-bearing deposits	1,253,208	3,290	0.35%	1,192,381	2,183	0.24%
Other borrowed funds	12,030	202	2.24	45,970	434	1.26
Total interest-bearing liabilities	1,265,238	3,492	0.37%	1,238,351	2,617	0.28%
Non-interest-bearing liabilities
Demand deposits	520,787			464,217
Other liabilities	24,123			25,032
Total liabilities	1,810,148			1,727,600
Shareholders' equity	153,173			139,824
Total liabilities & shareholders' equity	$1,963,321			$1,867,424
Net interest income on a fully taxable equivalent basis		47,534			43,906
Less taxable equivalent adjustment		(558)			(1,268)
Net interest income		$46,976			$42,638
Net interest spread ⁽⁵⁾			3.21%			3.16%
Net interest margin ⁽⁶⁾			3.33%			3.24%


(1)	Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% in 2018 and 35% in 2017.
(2)	Nonaccrual loans are included in average amounts outstanding.
(3)	Average balances of securities available for sale calculated utilizing amortized cost.
(4)	Federal Home Loan Bank stock balance and dividend income is excluded from interest-earning assets.
(5)	Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(6)	Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.